How does the costs process work in your state?

The costs jurisdiction in every state works differently. Our last article focused on the different ways costs are calculated and applied in different Australian jurisdictions.

The start of another year is the perfect time to consider the main differences in costs processes between the three main jurisdictions we practice in – NSW, Queensland and Victoria – with a specific focus on the advantages and disadvantages of each of the systems.

The next article will focus on the powers of costs assessors in each of the jurisdictions.

New South Wales

How are costs claims heard?
In NSW, all costs assessment proceedings are paper based.

How do you commence proceedings?
Before making a party/party or a solicitor/client application for assessment of costs, you will first need to serve a bill of costs on the costs respondent. The other party then has 21 days to file a notice of objections to the bill (30 days in the case of a client). A reply to these objections must be made within a further 21 days (although extensions are invariably granted if requested).

Clients in solicitor/client disputes must file an application for assessment of costs within 12 months of a bill being provided to them. Clients can also make a complaint to the Office of the Legal Services Commissioner in relation to a costs dispute under some circumstances pursuant to Div1 of Pt5.2 of the Legal Profession Uniform Law 2014.

Solicitors in solicitor/client disputes can only commence proceedings to recover costs claimed in a bill of costs 30 days after service of that document on a client, subject to provisions set out within s194 of the Legal Profession Uniform Law 2014.

If you file an application for assessment of costs, the assessor may fix a timetable if they have not received submissions or need additional information.

What happens next?
If the costs claimed are less than $100,000, the costs assessor has three months after a matter is referred to it to issue a certificate of determination with reasons for determination. This is subject to the assessor receiving all information and is subject to any timetable they have fixed. If the costs claimed are more than $100,000 they have six months to do this.

The positives

The negatives

A paper-based system is often less costly as it doesn’t require oral submissions or court attendances.

Parties receive a written record of all submissions and reasons for determination.

Parties have time to formulate submissions in response.

Parties do not have an opportunity to clarify their position in person, in a mediation or taxation type setting.

The waiting period of 3-6 months to receive a costs assessor's determination is a deterrent to seeking assessment of costs. This time frame extends if either party delays in providing submissions and responses.

The costs assessors’ fees are payable by the party/parties ordered to pay costs of costs assessment.

There are just over 50 court-approved costs assessors in NSW with various levels of experience. This, coupled with a deregulated costs regime (with costs generally based on hourly rates rather than scale fees), leads to less predictable outcomes.

Only parties to proceedings receive written decisions, again lending itself to less predictable outcomes.

Unlike Victorian and federal jurisdictions, there is no procedure or opportunity like a taxing registrar or a mediator providing an estimate of the amount likely to be recovered if the matter proceeds to assessment.

Queensland

How are costs claims heard?
As in NSW, all costs assessment proceedings in Queensland are paper based.

How to commence a costs claim
To claim costs on a standard or party/party basis, you will need to prepare a costs statement. You can find information about the procedure you must follow here.

To claim costs on a solicitor/client basis, you must prepare an Itemised bill of costs. You can find more information about the procedure you must follow here.

In a solicitor/client dispute, clients also have the avenue of making a complaint to the Legal Services Commission about its solicitors’ billing practices.

What happens next?
The parties have the option of choosing a costs assessor, by agreement, from a panel of about 45 court-approved costs assessors. Once the chosen costs assessor provides consent and once a consent order with respect to the assessor to be appointed is filed, the registrar can make appropriate orders and vacate the usual directions hearing date.

If the parties cannot agree on a costs assessor, the judge or magistrate appoints an assessor at the directions hearing.

The court-appointed costs assessor then undertakes an assessment of costs and provides a certificate of determination.

The positives

The negatives

The parties have the liberty to agree on a costs assessor to perform the assessment by filing a request for a consent order with the registry and, if possible, be accompanied by the consent of the costs assessor. The registrar can make a consent order where appropriate and the directions hearing date will be vacated.

Submissions in response to any notice of objections are not ordinarily required.

There are minimal requirements to be appointed as a costs assessor (other than five years post-admission experience). Consequently, many of Queensland’s approximately 45 court-appointed costs assessors have little experience or knowledge of costs.

Like NSW, there is a lack of certainty and consistency in Queensland as to what will or will not be allowed on a costs assessment, such decisions varying from costs assessor to costs assessor.

Due to the nature of the costs assessment process in Queensland, elements of ‘forum shopping’ are often seen, that is, looking for a costs assessor that is more likely to assess costs favourably.

If the parties cannot agree on a costs assessor to perform the assessment, the judge or magistrate appoints an assessor at the directions hearing, adding to the costs of assessment.

The formality of filing affidavits and nominating costs assessors also adds to the costs of assessment.

The parties do not have an opportunity to clarify their position in person, in a mediation or taxation-type setting.

The party, or parties, ordered to pay the costs assessment will also be ordered to pay the costs assessor’s fees.

Unlike the Victorian and federal jurisdictions, there is no opportunity to receive an early estimate of the costs likely to be recovered through a taxing registrar or mediator.

Victoria

Title

How are costs claims heard?
In Victoria, the Costs Court hears and determines all costs matters that arise from the State’s courts and tribunals. It also hears costs disputes between legal advisers and their clients.

How do you commence proceedings?
You will need to file a summons for taxation and the bill of costs. In party/party taxations you will also need to include an information form and the costs order, judgment or deed or release, and the filing fee.

You won’t need to pay a fee for filing an application for a summons for taxation in a solicitor/client dispute, so long as you’re within the time limit.

Clients in practitioner/client disputes must file an application for assessment of costs within 12 months of a bill being provided to them. Clients can also make a complaint to the Office of the Victorian Legal Services Commissioner in relation to a costs dispute under some circumstances pursuant to Div1 of Pt5.2 of the Legal Profession Uniform Law (Victoria).

Solicitors in solicitor/client disputes can only commence proceedings to recover costs claimed in a bill of costs 30 days after service of that document on a client, subject to provisions set out within s194 of the Legal Profession Uniform Law (Victoria).

What happens next?
All party/party bills of costs claiming less than $50,000 (including disbursements) will be sent directly to assessment: Pt 8 of O63 of the Supreme Court (General Civil Procedure) Rules 2015 (SC Regulations).

All party/party bills of costs of more than $50,000 will be listed for mediation: O50.07(1) of the SC Regulations.

The summons and bill of costs must be served at least 14 days before the hearing day named in the summons: O63.38 of the SC Regulations.

The respondent must file and serve a notice of objection at least seven days prior to the mediation.

Which scale applies: Party/party costs?
The scale that applies to party/party costs depends on which court you’re appearing in:

For Supreme Court matters, you will find the scale of costs at Appendix A of the Supreme Court (General Civil Procedure) Rules 2015.

For Magistrates’ Court matters, you will find the scale of costs at Appendix A of the Magistrates’ Court General Civil Procedure Rules 2010.

For Victorian and Civil Administrative Tribunal matters, costs are generally awarded on the County Court scale.

Which scale applies: Solicitor/client costs?
In Victoria, solicitor/client costs are usually claimed pursuant to the costs agreement a legal adviser has with their client. The most common methods of charging legal work include:

According to time: charging the actual time spent on a task and ultimately the matter. Rates will vary according to the size and location of the practice, and the experience of the practitioner providing the service.

By reference to scale: to the relevant scale of costs or practitioner remuneration order.

By fixed or flat fee: charging an agreed fee for the whole of the matter, for a stage or for a task.

By conditional fee: where all or part of the fee is conditional on success or a specific outcome being achieved.

The positives

The negatives

The Costs Court is a centralised venue for dealing with all sorts of costs disputes.

Provides a uniform approach to claiming costs – recoverable pursuant to scales of costs and assessed by one of four decision makers (an Associate Justice, a Judicial Registrar or one of two Costs Registrars).

Except for timed attendances, including telephone attendances or attendances to instruct at court, costs are not assessed based on time spent.

Rates allowed under the scale are deemed to be reasonable in all circumstances, providing certainty.
Scale rates are periodically reviewed and indexed, so they keep pace with inflation.

It is arguable that time billing protects and facilitates inefficient or incompetent practices, whereas a scale of costs allocates a set cost to each discrete item of work.

The scale provides certainty, even where a practitioner hasn’t been as meticulous in recording time as they should have been.

Scales of costs avoid any inflation in the amount of time spent and claimed.

The various Victorian scales of costs reflect a focus on providing value to the client rather than the billable hour.

Some Costs Court rulings are published, providing more transparency and consistency in decisions.

The scales provide just one rate for everyone, and don’t consider experience or expertise.

The rigidity of the scale does not allow a practice to use a wide range of fee earners with various levels of experience, in the same way that a costs agreement would. For example, the Supreme Court scale has just three basic rates (the highest rate being $393 an hour and the lowest $228 an hour).

In complex or time-consuming matters, the scale can reduce a firm’s profitability.

Efficient and ethical practitioners can be penalised by strict scale rates.

When a costs agreement is based on high hourly rates (as might be the case, for say, a specialist lawyer with city offices), the gap between solicitor/client costs and party/party costs can be significant.

Costs Court decisions are generally unavailable to non-parties.

And finally…

As you can see, each jurisdiction has its advantages and disadvantages. However, the one way to make sure you always capitalise on the strengths and avoid the pitfalls of the costs regime you’re working with, is to trust your costs to professionals like Blackstone.

Romaine Abraham is a lawyer at Blackstone Legal Costing. With experience across New South Wales and Victoria, Romaine is skilled in obtaining the best commercial results for clients.​​​​

Dipal Prasad is an associate at Blackstone Legal Costing, one of the largest legal costing firms in Australia with experienced costs lawyers and consultants in Sydney, Melbourne and Brisbane. Dipal is committed to maximising costs recovery for successful parties in litigation and minimising costs liability for unsuccessful parties.